Pricing and price cuts

There have been 142 price cuts reported to our MLS in the past 30 days, 92 of which were for single family homes and condos (the balance was rentals). I can’t say that I have been inside each and every one of these units, especially the condos, but I am familiar with almost all of the single family homes and could have and did, often) predict that they’d never sell at their asking price.

Now I’m not all that smart – any objective observer would have reached the same conclusion – so I wonder how 92 houses (out of approximately 600) could have been so mispriced to begin with. Worse, many of these have already seen multiple price cuts and are still too high. So, is it sellers with crazy expectations (and brokers willing to take the listings from those sellers) or are agents just passing out silly price estimates to gain listings?

It’s probably a combination, but what a colossal waste of everyone’s time, energy and money.


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8 responses to “Pricing and price cuts

  1. Resident

    Kind of like the time we’re wasting on reforming Social Security..everybody knows the age needs to be at least 70, but debate it we will.

  2. Stanwich

    You are forgetting about the other side of the coin CF. If the economy continues to improve and things remain calm, then buyers will be more willing to take the leap and buy. We know there is supply out (maybe not completely priced right) but the demand is lacking. And demand is simply created by dropping prices, other factors go into it.

  3. Anonymous

    RE pricing is inherently more emotional, poorly informed and illiquid than anything in liquid public securities

    And allegedly liquid public securities are often mispriced
    Hell, much of wealth in Manhattan or Greenwich is derived from playing these public securities mispricings, both long/short…

  4. Retired IB'er

    This, and your other posts of today, give good insight into the current market.

    Thank you, Chris.

  5. Quant Head

    Now that’s some news we can use.

  6. foobar

    my estimate as of year end was that fully 50% of Greenwich listed RE is priced at 2007 levels (Exhibit 1 of 250 – Bobby Bonilla’s), so I would expect to see similar adjustments. I think both sellers and realtors are to blame, I know well several brokers who have no shame in taking a listing at whatever the price wanted by the seller, figuring they will talk the seller down in due course.

  7. foobar

    just fyi, CF, pretty astounding in light of the bailouts, and makes me continue to think that some serious buying is around the corner (but only at 2003ish prices!!!)

  8. Anonymous

    I’ve lived in town since 1971, so I’ve seen a lot of markets come and go (though, to be fair, I was in third grade then, and not buying a lot of property). I am the market now and what it looked like to me is that a lot of inventory came on hoping that the much-ballyhooed Wall Street bonus pool would be enough to raise the market back to at least 2008 levels.

    We decided to stop looking for a few months until that all shook out. Cutting prices now is a last gasp effort to get at that bonus pool (which is not quite what it normally is, because it’s so unevenly distributed among firms) before it’s gone. Also, we expected a lot of inventory to come flooding in a bit too late, the same way that amateurs tend to buy and sell too late in the stock market. I could be way off base here, of course. The story so far: two of the three houses we liked–nothing we were in love with anyway–went to contract (precipitously below their original asking prices), and one other was taken off the market because nobody was prepared to overpay for it.

    Whatever’s left in a couple months may be quite appealingly priced indeed. Or not. Welcome to Greenwich, eh?